rally. in today's cover story, we'll go behind the numbers as worker wages in china continue to rise. the legal hurdles investors need to jump before taking the facebook ipo case to court. and, is corporate america changing for the better? plus, yet another trader who has his on eyes on silver and gold. first business starts now. you're watching first business: financial news, analysis, and today's investment ideas. good morning, everyone. it's tuesday, october 2nd. i'm angela miles.

in today's first look: can the bounce continue? the dow and s&p 500 rallied yesterday on better-than-expected manufacturing news from the u.s. the nasdaq lost 2 points. much of that had to do with selling in in apple. apple lost nearly 8 dollars. jp morgan-chase is sued for fraud by the new york attorney general for its mortgage-backed securities. american express is paying $112 million to settle allegations that it illegally charged customers with late fees and used other deceptive practices. tails are wagging at petsmart. the company is leaving the nasdaq to join the s&p 500, pushing out sunoco. scott bauer of trading advantage has his eyes on the market for us today. good morning to you scott. > > good morning angie. > > it was a mixed market yesterday, with some mixed data coming in. what do you think was most important to the markets yesterday?

> > honestly, we had that ism number that came out near the opening of the market, which, albeit not being a great number, was a better-than- expected number. but i really think the market had been set up for a little bit of a rally based on the news that had come out overnight on sunday night, out of china and out of spain. first off, out of china, their manufacturing number wasn't great, but better than expected, showing a bit of expansion. and out of spain, with the bank stress tests, the banks didn't need as much as originally thought. so i think those two key pieces actually set the support up for the marketplace to come out. now, talk what you want about bernanke, but at the end of the day, the market didn't sell off that much from the highs. > > what will be most critical to the market today? > > i would look for a continuation of volatility to go down and a bullish bias to the marketplace here. the market seems to be shrugging off anything that is perceived as somewhat negative news, and jumping on the bandwagon of any positive news. with china being closed all week and no news

coming out of there really, i think the focus is going to be on, toward the end of the week, the jobs number and economic numbers that are coming out. but i would really think that we're going to see this little bullish trend going toward the end of the week. > > on the show yesterday we had a trader talking about the gold-to-silver ratio. is that something you're watching as well? > > it really is. we're at about a 12-month support level now in that ratio, meaning that gold as compared to silver is actually trading pretty cheaply. it's about 50 right now, just over 50. in the last 12 months, we've seen that range between 50 and 59. it may be time to dip the toes in gold and sell some silver as that ratio hopefully expands back out. > > that's scott bauer of trading advantage. thank you scott. > > thanks angie. it wasn't monday night football, but fed chairman ben bernanke was decidely defending yesterday. he said the fed needs to continue lowering borrowing rates while the economy continues to grow slowly, and that its bond-buying strategy will continue. he insisted that five years of low interest rate policies have not

increased inflation. the fed plans to hold the interest rate near zero until at least mid- 2015. bernanke also indicated that there is not another recession on the horizon, but the economy still isn't strong enough to add jobs faster than the current rate. in greece, union workers are preparing for more 24-hour strikes and walk-outs this month. workers are protesting the government's austerity measures. government officials submitted a draft of the 2013 budget yesterday that calls for a new wave of deep cuts which will save $10 billion next year. workers will protest proposed cuts to salaries, pensions and other benefits. last week, 50,000 people in athens demonstrated against austerity. wages in china are going up - by some estimates, about 17% a year. it is providing china's growing middle class with more money to buy goods, though inflation is not helping. but it may also drive up the cost of making some of those products there, as well. in our

cover story, who gains as china's employee base moves up? despite china's present economic slowdown, the story of its workforce recently has been of migration from farm to factory. 25 million made the move in 1990. last year, that figure grew to 158 million. it has increased china's productivity and competitiveness. but lately, that workforce is demanding more. "they increasingly learn that there's a big gap in what they earn and some other people." the wage gap in narrowing. twelve years ago, the average wage in china was 60 cents an hour. now, it's $2.50 an hour, a lot closer to mexico's average wage of $3.50 an hour, according to flextronics international, an electronics- maker with countries. now, some say china is preparing to change its manufacturing model. "they're going to put more in r&d and robotic." wages in china are rising so quickly that the boston

consulting group estimates labor costs for manufacturing in china and the u.s. could converge as early as 2015. think of it - a billion consumers with more money to spend. "you want people to have money to buy your product." but there's a catch - china wants to promote chinese-made goods. "chinese always try to encourage buying goods made in china. it helps unemployment and is a source of national pride." for products aimed at american consumers, the real winner in china's rising wages may be mexico - a lot closer to the u.s., which means faster and cheaper. another benefit to the u.s. if mexico's export economy is stronger - american companies earn 37 cents of every dollar exported from mexico. why? mexican companies rely that much on american-made parts - far more than chinese companies. europe's unemployment situation

could soon spin out of control. the region's government warned this week that the high jobless rate could lead to an "economic and social disaster," particularly for younger generations. the unemployment rate for 18- to 25-year-olds hit 22.7% in august. now, the european commission is urging businesses and governments throughout europe to do all that they can to avoid a "lost generation." in the u.s., temp hiring is ticking up in the retail sector. macy's has plans to hire 80,000 temporary workers for the holiday season. the move follows similar annoucements from kohl's, walmart, and toys 'r' us to increase employee ranks as the holiday shopping season approaches. small businesses are also expanding staff. according to a survey by intuit, small companies hired around 40,000 people in september, while revenues dropped slightly by .04%. overall, there's a surge in self-employed people, with 600,000 people going to work for themselves since november of last year, bringing the

number of people who are self- employed to 14.2 million. in a sign that business is shaping up, research firm paynet finds that lending to small firms jumped 3% in september, the second straight gain. turbulent times continue at american airlines. reports say a row of seats on a 757 came loose shortly after take off over the weekend on a flight from boston to miami. the jet landed safely at new york's jfk. meanwhile, globally, airline profits are soaring. the airline industry is projected to earn more than $4 billion this year, compared to previous estimates of 3 billion. next year's numbers could fly up to $7.5 billion as airlines invest in new fleets and become more efficient. customers of some big banks are frustrated with the response to recent hacker attacks. last week, clients of bank of america, jpmorgan-chase, citigroup, u.s. bank, wells fargo and pnc bank could not access accounts or pay bills online. a hacker group admits

it attacked the banks in retaliation for an anti-islam video that mocks the prophet muhammad. nasdaq and the nyse are also targets of the so- called "hacktivists." controversy is building over ikea's most recent move: deleting images of women from photos in its saudi catalogs. ikea's catalog publisher in the country deleted women in line with the country's tradition of forbidding women in advertising. some ads featured a mix of women and men in the swedish catalog, but no females in the saudi copy. swedish newspaper metro compares the deletions to soviet censorship. ikea says it regrets the publisher's decision and doesn't agree with its values. healthcare and biotech funds are up a strong 22% this year. but a money manager tell us the opportunity to get in those stocks may not be over. "well, i think glaxosmithkline is the pick of the litter in the large-cap pharmaceutical

sector. as you know, there's been a flight to quality and safety in yield. glaxosmithkline, which is based in the uk, pays a dividend yield every quarter. kellison belives the stock may be 10 to 15 dollars undervalued. he adds that while lilly is trading near its highs, merck could still offer a bit of rally action for investors. honda is expanding a recall. the company is recalling 600,000 accords with v-6 engines made between '03 to '07 due to power steering hose problems. honda claims the hoses can crack and lead to fuel leaks. one fire has been reported due to the faulty part. in may, honda recalled around 50,000 acuras due to a similar problem. meanwhile, at gm, 41,000 cars are being recalled for fuel pump issues. the models include the g-5, cobalt, and 2007 ions, equinox and torrent suvs. amazon's new kindle is already becoming popular. pre-orders for the kindle "paperwhite" and its 3-g version are said to be

strong. the e-readers begin shipping this week. the device has a self-lighting screen and sells for $119. amazon is making a major push in the tablet market, which is heavly dominated by apple. it's a boy for yahoo's marissa mayer. the company's new ceo delivered a baby boy this weekend. mayer's husband confirmed the birth on twitter saying the couple "couldn't be more excited." yahoo says the new mom will be back to work in just one or two weeks. still to come, is facebook under fire? we'll get an update on how the company is faring after a slew of lawsuits following its ipo. but first, why major change could be happening within the walls of corporate america. that's next with bill moller.

with the mistrust if not loathing many feel toward corporations and high finance, you wonder, are they teaching enough ethics in business schools these days? dov seidman is a graduate of harvard and oxford, and he paid attention to those classes. he started a business, lrn, helping global corporations operate in a more principled, profitable way. his newly revised book, "how: why how we do anything means everything," has been lauded by fortune magazine, tom friedman of the times, elie wiesel and bill clinton, who wrote your forward. congratulations on all of that. > > thank you bill. > > it used to be, "just get it

done, i don't care how you do it" was the axiom for how business operated? why is that no longer the case? > > when that was the axiom, we were all watching "the godfather:" "it's not personal, it's just business." we can go to funerals and hear that he was a jerk at work, a ruthless negotiator, but a loving husband and a caring father. if business operates in a separate sphere, then "just get it done, just do it, just to it now, i don't care how," is actually a rational strategy. that's all become too big to fail. the world has fused. it's gone from connected to interconnected to interdependent, where we rise and fall together, then how we relate to each other, how we create deep loyalty, how we engender trust, how we treat people, how we show respect, how we behave, matters more than ever in ways it never has before, and frankly has become the source of competitive advantage. that's why i say we're in the era of behavior. > > you talk about trust. every company talks about trust. "you can trust us." it's sort of an easy throwaway line almost. > > we've measured this across 36,000 people working in large to small companies in 18 countries around the world, and

only 11% of organizations are high in trust. > > who is doing it right? > > we have learned to look for trust. who can we trust? aristotle said trust is a virtue when you give it away. so when doctors at the university of michigan health system trust their patients after they've harmed them by saying they're sorry, which could be an admission of guilt, they sue them half as much and claims go down by 50%. when the rock band radiohead trusted its fans to pay what they thought the music was worth, they made more money on that fifth album than all of the four albums put together when they put a price on it. > > do you think corporate leaders who don't get this are going to ultimately fail? > > absolutely. they're not going to map to the world today. the ceo of unilever, who i respect and admire, the other day said to me, dov, it took them 17 days to get rid of mubarak, and he had a military. i don't have a military. what if my consumers or my colleagues don't like how we're operating this place? the fact that he's willing to rethink fundamentals of leadership, to understand that it's no longer about formal authority - "i'm

the ceo, i'm the boss" - but moral authority - "do this because it's right, you trust me" - ceos that are rethinking this and going on a journey are the ones who are winning and taking their organizations with them. > > dov seidman. thank you so much. > > it's a pleasure. thank you bill. still ahead, facebook got slammed with lawsuits following its botched ipo. we'll get an update on where the legal battle stands, next.

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the number of lawsuits against facebook is said to have swelled to 29 related to its botched ipo in may. there are also several lawsuits against nasdaq for its role. john coffee, a law professor at columbia university, joins us via skype this morning with his legal insights. good morning and good to have you on the show. > > good morning to you. pleasure to be here. > > is it difficult for investors to get these cases to court? > > it's not difficult in the context of an ipo. there's probably no other legal context where the balance or the advantage is tipped as sharply in the favor of the plaintiffs as in the world of ipos and other registered securities offerings. > > i spoke with one attorney going to bat for clients against facebook. he says the case is stuck in procedure. is that the norm? > > the norm is that there's an

awful lot of organization in the case. a case doesn't get started right away until one team of plaintiffs gets control of the litigation. then the next thing that will happen is that the defendants will make a motion to dismiss. that's the really critical motion, because typically if the defendants cannot get the action dismissed at the outset, then we're likely to get into settlement negotiations, which may take a year or more, but the process can go one to three years. > > what are the odds these lawsuits will end with a settlement? > > it depends on whether or not the action will be dismissed on the defendants' motion to dismiss. if you get over that hurdle, a settlement becomes at least a 50% probability. but in terms of whether the action will be dismissed, just looking generically at all the data, it's somewhere in the 1/3 to 40% range. > > zynga and groupon are also facing an unusual number of lawsuits. in fact, the number of ipo lawsuits is on the rise. what is that telling you? > > that the price went down. you don't get litigation unless the stock falls significantly after the ipo, and falls in a

sharp drop rather than a slow, gradual decline. that can be consistent with there having been an omission or a misstatement of material information. that's really all the plaintiff has to show in an ipo securities litigation. > > john coffee, law professor at columbia university. thank you for your time. coming up, a money manager sure is amping up on a power stock. chart talk is next.

matt shapiro, president of mws capital, joins us this morning for chart talk. good morning matt. > > morning angie. > > you bring us a power stock today. what is your play? > > integrys energy, it's the chicago regulated utility in this region, supplies natural gas; and yesterday, they came and bought a power plant up in

wisconsin for $440 million. the stock absolutely took off, and now it's trading at about $54. pays a 5% dividend. and a lot of these utilities have kind of backed off in the last couple of months. it's a good time to get into some of them. > > so traders are taking their profits on these stocks. will they be forced to get in during the fourth quarter do you think? > > i think so, because investors out there are facing, you know, you're not getting anything in the bank, so you can get into some of these utility stocks that pay 4 to 5%. now they have backed down some from their highs, because the price of electricity is falling along with natural gas. so, many production assets. however, teg, integrys energy, did not. it's a regulated utility. does a little bit better. it's a little bit more of a stronger play despite what happens with electricity prices. > > are there any caveats with this stock? > > well, if electricity prices

take off and natural gas prices go much higher, we have a very, very cold winter, as a regulated utility, it's not going to do quite as well as the unregulated power producers. > > matt shapiro, president of mws capital. thank you. > > you got it. we are out of time for today. coming up on wednesday's show, insights on healthcare reform ahead of tomorrow night's debate, and what it could mean for your wallet. from all of us at firs business, we wish you a terrific tuesday.

. dozens of people were hurt after an amtrak train derailed what amtrak is doing to get passengers around that crash. and a celebration is on in the east bay for the a's, they are

now officially in the playoffs, it is all ahead on the khou channel 11 news. right now we are sitting at a very balmy 68 degrees and here we go out of the gate, temperatures will trash tomorrow and take a look, 90s to 100, here is sal. traffic is off to a doesn't start -- decent start, as you can see it is doing well, and on 24 it looks